Sitting date: 2 Apr 2025

BUILDING (OVERSEAS BUILDING PRODUCTS, STANDARDS, AND CERTIFICATION SCHEMES) AMENDMENT BILL

Third Reading

Hon CHRIS PENK (Minister for Building and Construction): I move, That the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill be now read a third time.

I'd just like to start by acknowledging the debate that we've had previously in this House, and including in the Transport and Infrastructure Committee, about this legislation. I'd like to thank all who have supported it, which is, in fact, all the parties around this House. I think it's important where possible that we have a bipartisan basis to legislation that is so important to the wellbeing of Kiwis.

I acknowledge and thank all those who have contributed to that; who have contributed positively by contributions and discussion, including that fundamental question around liability as was traversed at the select committee process. I'd like to thank the submitters. I'd like to thank the Ministry of Business, Innovation and Employment (MBIE), who provided high-quality advice to me and to others and enabled us to be now at the stage of the third and final reading such that we can pass this into law now.

A lot of the detail has been traversed already, and I don't intend to go over that ground again. In my comments on this, the final reading, I intend to briefly set out what, why, how, who, and when this policy will come into effect.

First, on the subject of what the policy does, it's already the case that some 90 percent—that's "nine-zero percent"—of building products in this country derive from overseas, so, in a sense, actually, it is a red herring to think about this as encouraging the use of overseas products to the extent that that already happens. It could hardly be more than it is. Perhaps that percentage will tick close to even to 100 percent, but, actually, there is encouragement for our local manufacturers and suppliers as well, and I will explain that shortly.

Really, what we're trying to do is make it easier for products that are already coming into this country and currently face a very burdensome process to obtain approval through a number of different existing routes so that they will be able to be used in New Zealand homes, commercial buildings, and infrastructure too, for that matter, where it's relevant. So that's what the bill is aiming to do.

Why it needs to do it? Well, first of all, we have an affordability problem in this country regarding building materials and, of course, the cost of construction more generally. It's increased some 40 percent since the year 2019, and, in fact, over time before that too, it's fair to note that the cost has been steadily increasing beyond even inflation over the last few years.

For the purpose of introducing more competitive pressure and, therefore, putting downward pressure on the cost of construction materials but also thinking about the value we have of greater resilience in the event of supply shocks when overseas materials come from only certain overseas origin points, and also in the name of innovation for all the reasons that we want to encourage not only sustainable building practices but also other ways that we can have buildings of better, higher quality delivered much more readily and, therefore, affordably—so, for all these reasons, we say that the bill will be a useful addition to the tool kit, almost literally, of the builders. When I say builders, I mean tradies, designers, and architects, of course, and all those who administer the control system.

As for the how: the way that this operates, as we've heard previously, there are three main levers that we're able to pull. One is to make it easier to use products that meet overseas standards, and these are standards by design that will be equal to or higher than those that exist already in this country—it's not an exercise in lowering standards.

Second, streamlining the sighting of overseas standards and also requiring the acceptance of products that are certified overseas. So there are whole schemes that we are able to adopt, and we will do that on the basis of standards and certification systems from jurisdictions—be it whole nation States or on a State-by-State basis—that are credible and comparable. "Credible" means that they have good, high-quality building standards—no less than those currently that prevail in New Zealand—and "comparable" means that they are like New Zealand in the key ways that relate to the building products, be it in relation to UV light, be it wind or sea spray zones for coastal areas, be it seismic strength as that relates to the structural integrity of the products, and so on.

Rima Nakhle: Reasonable.

Hon CHRIS PENK: Thank you. My colleague and friend Rima Nakhle says that's reasonable. I'm inclined to agree—I agree with her agreement.

As for the question of who, well, the decision maker in this case is a combination of the chief executive of MBIE and the Minister for Building and Construction. Obviously, that person and the person who is the Minister—currently me, but, obviously, at some future date that will be someone else. I'm not necessarily going to continue this role for ever, but for now, that's who we're stuck with. But that decision maker, whoever it may be, will have access to high-quality advice: a combination of the public sector through MBIE, industry—of course—and academia. We've got lots of ways of determining where the appropriate line is drawn in terms of the supplies that we are able to regard as trustworthy in this country and certify automatically accordingly.

Other key players in this space include the New Zealand manufacturers who will actually have a benefit from this legislation. I know that might sound counter-intuitive in terms of making it easier for overseas standards to be met. But for the Kiwi manufacturers, who in many cases, are doing a great job innovating and producing products for our local market, to give them an opportunity to measure their work against overseas standards—for example, large jurisdictions like the European Union, or large single national markets like, for example, the UK or Australia, or states in the US, for that matter. If they are able to measure their New Zealand, good old Kiwi products against those, then immediately they're export-ready and export-attractive to those other markets. So we hope and expect to see a benefit for them, as well as, of course, the Kiwi consumer, with whom we are very interested.

The other key player that I do want to mention in all of this are the building consent authorities. Roughly speaking, at the moment that is some 66 different councils, along with the outfit known as Consentium, which does the work for Kāinga Ora. For all of these, at the moment, they face, if not through the CodeMark route of product acceptance, and maybe with reference to the Building Research Association's appraisal, they otherwise have to determine, each and every one, facing liability of a joint and several nature in the event that something goes wrong, a determination of whether products meet New Zealand standards, and that's a huge burden for them to bear. It's an accountability, it's a responsibility, and it's a liability that they bear on behalf of their ratepayers. I think it's actually not particularly fair to them—and I'm pleased to have, I think, some nods of support from the former Mayor of Wellington.

Local government around New Zealand, I think it's fair to say, is united in in wishing for the issues of liability that pose such a burden to them to be resolved. That's a larger piece of work that we are engaging in. We know that something must be done in that space for the benefit of all concerned. But for the purpose of this bill and this regime—as was pointed out by the select committee—we need to make it really clear that councils will not be on the hook for the failure of a product that's approved in this way, provided that it's installed correctly and is the right kind of product for the right kind of purpose, and, through the building consent system, they will have the opportunity to determine that.

Finally, the question of when. On the passage of this bill, which I think will be not much more than an hour or so—I'm thinking it will be following the dinner break, but not much beyond that, hopefully—there will be a law under which there will be a framework with regulations able to bring in certification standards and regimes that will be, effectively, a rolling maul approach. So initially—and it might be as soon as, for example, June of this year, or maybe July, but certainly from that point onwards—progressively, it will be possible for regulation to be set out, published on the MBIE website, notified in the Gazette, where people can see what is allowed in this country.

There will be tens of thousands of new products available very soon. I'm grateful to everyone who's worked hard to bring this policy to fruition and, indeed, to pass it into law shortly, and I commend this bill to the House.

DEPUTY SPEAKER: The question is that the motion be agreed to.

ARENA WILLIAMS (Labour—Manurewa): Labour supports this bill because we support competition in the building supply sector and cost reduction for homeowners. This is all about trying to pass on the benefits of overseas imported products into New Zealand to New Zealand consumers, as well as the builders who use them, without unduly burdening local manufacturers. The Transport and Infrastructure Committee has delved into those questions very deeply. We had the benefit of considering a number of really useful and well-thought-out submissions from the industry and so came to a position where everyone in this House could see a benefit in making this move. You know, making buildings cheaper, making the thing that costs between 16 percent and 24 percent, which is the building materials, cheaper we hope will have flow-on effects to not only homeowners who are trying to build new houses but also the small suppliers.

So now, with these rules in place, I guess the onus is on the Government and on the Ministry of Business, Innovation and Employment (MBIE), who will be working through these building system changes as system changes, to make sure that there is long-lasting effect not only on competition but on prices coming down and, if we are increasing the number of products available in the New Zealand market, that they are working well.

I'm going to step through those. Because this is something that Labour really supports, because this is something that Labour wants to see working and driving affordability without compromising on safety or quality or local jobs, it's important that we canvass here what we will be looking for to satisfy ourselves that this is a change that continues to work.

So I've got, sort of, three questions in my mind that I've used to judge this. The first is: does the change lower prices for consumers, not just for the profits of big importers? It was really useful to engage with the Minister for Building and Construction in the committee stage about this, because the Government's argument around this, and certainly what's been published online and is available to participants in this process as the bill has worked its way through Parliament, is that opening access to international standards in groups of products will improve competition and reduce prices. So I think that will have an effect.

This was something, though, that the Government considered in the previous term in response to the Commerce Commission's market study, and at the time officials advised the Labour Government that these changes were not necessary and would not make that change. So we'll be looking really closely about whether that market impact is something that we see bearing out, but we do want to give it a go, because anything that drives competition, and lasting competition, in the sector is absolutely worth trying if the right kinds of safeguards are in place to make sure that we're not compromising on quality. Those savings, as well; they need to be passed on to homeowners.

So what I would be looking for in this as a system change is whether this creates not only a different sort of market dynamic between importers—because we have two very large building companies in the New Zealand market that are vertically integrated and will be part of the existing market structure and will be able to use these rules, and then we have little importers around the sides. In a market that's structured in that way, for the little importers to gain the benefits that they would need to be able to compete with the larger players, there would need to be a significant lift in their ability to compete because of their new ability to bring in different products. So there is going to need to be significant change in the rules, then. We don't know that yet because we haven't seen what the regulations say, we haven't seen which standards we will be able to use, but that is something that we will be paying close attention to.

On the back of that, I will be looking for whether this doesn't in fact do the opposite thing—it might entrench the market power of those two players that are established in our industry. That would be the worst possible outcome for competition, that you would have big importers that were able to import a bigger range of products, a bigger range of cheaper products, but not be passing those savings on to consumers because there wasn't the market dynamic that incentivised them to do that.

I want to know, and still don't know, how the Government will be continuing to monitor what happens to prices in the industry. We had a great back and forth with the Minister in the committee stage about the role of the Commerce Commission and the role of MBIE in its monitoring, but it's not something that the New Zealand Government is well set up to do, to continue to play monitoring roles on prices for consumers in an industry that is specialised in this way. So it's the Commerce Commission's remit to do market studies as something that allows them to do that, but this Government has not launched any market studies, and so I don't think that will be the way that they use to monitor this. So we will be paying close attention at home.

My second question is: does this change maintain high standards of quality and safety? It's got to be a bottom line for New Zealanders who are building new homes and the builders, especially the small builders, who are engaging with these changes in really good faith, that the quality standards, the safety standards aren't compromised. We really support this, because that's not what we understand the change to be. We've heard multiple times from officials that the standards being used in the new rules will be equal to or better than New Zealand's building standards. In fact, in many respects, many parts of the building code in New Zealand have lagged behind the rest of the world, so there is real opportunity to, in fact, improve the standards of products that are brought into New Zealand with these new standards.

The third is: are local manufacturers getting a fair go? I hear the Minister when he says that being able to use more standardised, more internationalised rules will help New Zealand manufacturers who are exporters to export their products and to innovate for an international market. But in a New Zealand market where 90 percent of materials are already imported, most of the New Zealand manufacturers who—you know, the number, the actual bulk of the number of manufacturers are manufacturing for the New Zealand market; they're not competitors on the world stage. So we're thinking about those manufacturers that have already gone through the compliance in New Zealand not facing further headwinds with products that haven't needed to go through a New Zealand process, or those manufacturers who are in the process of going through the compliance process having to sort of do something from the start again.

So I'll continue to be meeting with those manufacturers; they're doing a great job. There are so many great instances of Kiwi innovation in building supplies, especially those manufacturers who are building in recycling, building in innovations like using New Zealand's materials that we have here that other countries don't have to make better products than anybody else does. We need to make sure that, you know, it's them that are able to enjoy the benefits of further competition in the industry, because if we get this right, the competition dynamics of the large-scale companies will—you know, the market power there is something that they won't be able to exert over those smaller manufacturers.

Look, so there's still these structural issues in the building system. This isn't a silver bullet, but it is a really, really useful change. It's a useful change, and it fits with Labour's vision for a competitive and high-quality building sector, because we want to bring the costs of building down, and so bringing the costs of materials down is a key part of that. But we need to keep in mind who we're doing it for. We're doing it for the first-home buyer; we're doing it for those people who are on the receiving end of new homes in New Zealand. We want them to be warmer, we want them to be drier, we want them to be better quality, and we want them to be more affordable. So if these changes don't do that, or if these changes make it worse, we should be willing and quickly back here to make sure that the market dynamics in the building system are working properly.

We also have to look at the long-term competition impacts here and make sure that, actually, we're building out a system where, in New Zealand, we can get things built and that these chokeholds in the New Zealand economy of the duopolies and monopolies that exist within many of our supply chains aren't holding us back from being able to realise the growth that we should be experiencing.

So Labour agrees with this, but it needs to go along with strengthening our domestic manufacturing sector and prefabrication of housing, and we also need to support innovation and ensuring competition. Thank you, Madam Speaker.

Dr LAWRENCE XU-NAN (Green): Thank you, Madam Speaker. I rise on behalf of the Green Party of Aotearoa New Zealand in support of the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill. The purpose of this bill is to amend the Building Act 2004 to remove barriers to overseas building products being used in Aotearoa's building products market. But I think, to look at it more broadly, I first want to touch on some of the key aspects that we discussed during the committee stage. Again, we would like to thank the Minister for this particular bill, the Hon Chris Penk, for being, as always, very engaging and very informative in the discussion during the committee stage.

Just a couple of key themes as a part of that, I think one of the first and foremost observations on this bill is that a lot of the bill actually ties into how secondary legislation is going to present itself. I think it is by nature of that secondary legislation that we are able to see how beneficial this particular bill will be for communities and also for businesses, and also just for the everyday, ordinary people of Aotearoa. I think that is something that is quite important to mention—that, although the primary legislation that we have seen in front of us is reasonably robust, and we had a very robust discussion, we are looking forward to seeing the secondary legislation and how that will eventuate.

In terms of this bill, there is a number of aspects that we discussed substantially, and the first one is around, I guess, the very focus of this bill, which is what sort of international opportunities this is going to be presenting by being able to look at some of the overseas standards. We discussed in depth clause 4 of this bill, and clause 6, and particularly the certification process of overseas products, and one of the things we had a discussion with the Minister on is around how this will look in terms of some of the overseas requirements and compliance with New Zealand requirements when it comes to things like sustainable building practices, which I will talk more about later. But I think fundamentally, as the Green Party's trade spokesperson, I was really interested in how this particular legislation is interacting with existing but also prospective trade agreements. And the one that I highlighted in this case and with the Minister, and we had a very good discussion around this, is the Agreement on Climate Change, Trade and Sustainability and how this would potentially interact with the Environmental Goods section of that particular agreement.

One of the other things that we did also discuss quite a bit was around competition and potentially, actually, some of the nervousness that local communities may experience as a result of this bill. It is true that we are looking at broadening our ability to have more internationally aligned standards and recognised standards and schemes. But, again, there have been discussions during the committee stage, as well as, we see, through submissions, that local providers are interested, I guess—and also, in some ways, nervous and hopefully will be reassured by some of the conversations we had with the Minister—around the opportunities that this will have for local communities and local providers and what it means for their livelihoods. There's a genuine concern that they would be outpriced or undercut by some of the overseas competition as a result of this.

Simon Court: That's what we're hoping.

Dr LAWRENCE XU-NAN: I think it is really important for us to always remember that we are in this House first and foremost for the people of Aotearoa and for the people of Aotearoa's livelihood. And it is important for us to know that there are genuine livelihoods at stake over here. And I would assume that certain parts of the party who is sitting next to me, builders, etc., who very much may be affected as a result of this bill, would be sensitive and recognise, too, that particular fact. This is something that we have heard during the committee stage, and I think it is really important for us to highlight.

The other part that I would like to highlight, in terms of the committee stage, is around how this would work with local government, and particularly when we're looking at the Building Consent Authorities (BCA) and whether there is going to be consistency with BCA and how they would potentially accept some of these standards, particularly for organisations and for, I guess, the workforce—how they will be able to navigate the two different schemes. Indeed, this is something we heard both from the submissions from local government but also from submissions from other, particularly peak, bodies within the community. I think, in this case, there was an Amendment Paper that was proposed by the Hon David Parker, which I think would have clarified very well some of these points we were discussing during the committee stage, and even the Minister himself during the committee stage—we had a very fulsome discussion around this, and hopefully the essence of what the Amendment Paper proposed would have been taken on board. But I understand that there's still possibly some uncertainty around that. But it is an Amendment Paper that the Green Party of Aotearoa, Te Pāti Kākāriki supports.

This brings me to my final points from the committee stage, which are around sustainability and the healthy homes element. I think, again, with legislation like this, one of the conversations that we did have during the committee stage was, for example, what this means in terms of the interaction with the Green Star rating, both for commercial buildings but also for residential dwellings, and how this would allow us to really enhance and also expand on sustainable building practices, as well as being able to have some of that healthy homes. And hopefully, based on the responses that we have received, there is going to be some consistency with existing practice around this. The Minister has sort of, in many ways, reassured us at the committee stage that some of these are very much in consideration. So we are interested to see how that would eventuate as well.

Finally, in terms of that, this is probably something, just jumping the gun slightly, that my colleague will also mention, probably at a later stage: when we were looking at clause 8, new section 25B, around building product specifications, there were questions that we had in terms of what sorts of things it would allow for really amazing domestic industries. I'm looking at the wool industry in particular when it comes to how they can be a part of this particular creation of, and cocreation of, the standards. I think that is something that really deserves highlighting, and particularly from a rural development and regional development perspective, which I'm sure some of my colleagues will talk a little bit further about later on.

And, finally, I think, just to finish up, in terms of the broader conversations we had during the committee stage, there were a number of nuances that we were seeking clarification on, particularly around how the chief executive, the CEO of the Ministry of Business, Innovation and Employment in this case, will approve certain things and how they would also be able to review certain standards, and particularly overseas standards as they come up or as they change on the international stage.

Finally, we would like to say that one of the reasons that Te Pāti Kākāriki actually supports this bill in the context of Aotearoa is because of the fact that we genuinely would like to see more warm and available housing for the people of Aotearoa, not just to own but also in terms of renting. We often forget renters as part of this conversation, and as we see more and more people in Aotearoa will be renting in the near future, this is something that is very much top of mind. We have yet to see, and we are looking forward to seeing, some genuine, tangible solutions and tangible manifestations of some of the Government's housing initiatives, because it's all very well painting a picture and saying that we are building X number of houses, but the fact remains that a lot of people in our communities are still without a home to live in. That is the very nature of the situation we're dealing with. For those who are lucky enough to be renting or to be even more privileged to be owning their own home, we're seeing that it is not necessarily affordable, and particularly for young people. One definition is that people should not be paying more than 30 percent of their gross income on their housing, whether it's rent or it's a mortgage, and we are not seeing that reflected in our communities.

So, to finish, we would like to see a bill like this genuinely—genuinely—contributing to making our homes cheaper and also more affordable but, at the same time, warmer and also safer, because all of that is important.

CAMERON LUXTON (ACT): Thank you, Madam Speaker. Well, it's nice to hear that the Green Party understands profit, in some ways; it's just a shame they think that you get it by protectionism.

ACT is welcoming the passage of the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill. It delivers on something that ACT campaigned on throughout 2023, and can I say well done, Minister Penk, for picking up such a brilliant idea. Also, across the House, thank you to everybody in this House, for seeing some common ground on how we can actually improve the building industries' affordability in this country. We have been oppressing the building industry, in a way. We've been saying, "This is what you can build with, and what you can't.", and every different town's going to have a different rule. But what we're doing tonight is liberating builders and tradies and designers, and the materials that they will be able to choose from and find from places around the world and overseas.

I have been in the building industry for some time, and I've met many people who reached the end of their careers too early because they were sick and tired of the red tape and nonsense they were going through, trying to get products approved to be used in New Zealand. These are good people, who cared a lot about the products they were supplying to the community and knew that they wanted to use the right products. But they also just lost a little bit of the passion. When you get designers saying, "Look, here's my design, but right now this will not include any RFIs coming back from the council, because I know I'm going to get them. I know it's going to keep coming, and the costs are going to keep coming in.", the prices just blew out of control, and I can think of a designer friend of mine who left the industry just out of sheer frustration with what we were going through.

What I think this bill will do—well, it's not what I think. What this bill will do is allow some innovative and effective and affordable products into New Zealand in a scheme that is not wildly different. We will not be running two different schemes, as we've heard tonight. There is a recognised standard in New Zealand, a recognised certification scheme in New Zealand, that has been deemed to have been met when it's used in the correct manner—the building code that is CodeMark. There are already schemes that we have in New Zealand, that are already operating in this building Act, and what we're doing here is allowing the Minister to recognise schemes and certification methods—and the chief executive of the Ministry of Business, Innovation and Enterprise to recognise certain products from overseas—and say that they will comply with our building code.

Now, I just wanted to touch a bit on the building code, because this is something that—you know, it's not in-depth stuff, but, basically, when you bring a product, it has to comply with specific elements of the building code. Our building code has things that you have to comply with, if your product is to do something. For example, when we have a plaster board crisis and you want to replace like for like, you have to be able to say it applies with durability, perhaps—I think it's clause B2 of the building code. If it's in a wet space, you might have to deal with the wet area, for which, I think—oh, jeez, I'm not going to go off the top of my head, but—

Hon Rachel Brooking: Come on!

CAMERON LUXTON: —these are the sort—oh, jeez! I don't want to get caught on that one. But I think this is the sort of thing that we will be complying with. Things like the famous clause H1, which we've been traversing in the Transport and Infrastructure Committee—about how the Minister has amended some of the changes to clause H1. These are the sorts of things in the building code that products need to comply with, and new building products that come in from overseas will need to comply with the building code. This is not a relaxation of the standard, and that is what the Minister has reiterated tonight.

This recognises the fact that New Zealand is a trading nation and that we should be trading for high-quality goods so that tradies, designers, and people who buy the eventual product of a house or a renovated building—the people who go on to live in it, either renting or buying—can have affordable housing so that New Zealand can start going towards the country that we expect to be: a land-owning, liberal democracy, with products that match our acceptable solutions. This is a great change. I am sure it'll be applauded on building sites around the country, as tradies sit there and eat during their smoko and talk about what a great thing this Government is doing for this country. Thank you.

DEPUTY: Members, the time has come for me to leave the House for the dinner break. The House is suspended until 7.30 p.m.

Sitting suspended from 5.57 p.m. to 7.30 p.m.

ASSISTANT SPEAKER (Maureen Pugh): Members, when we broke for the dinner break, we were debating the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill. We are up to call No. 5—the New Zealand First call.

ANDY FOSTER (NZ First): Thank you, Madam Speaker. It's a pleasure to rise to speak in this debate, especially when it's one where, essentially, there is unanimity across the House. I think we've all said that we want the same thing. We've all said we want warm, dry homes for everyone, Dr Lawrence Xu-Nan said warm, available homes, and we all recognise that housing supply is an issue—to have enough quality housing to house adequately a growing population. Actually, it's interesting just to reflect on the growth of our population over the last few years. Until 2019, six of the seven highest ever net-immigration levels were the years between 2014 and 2019—six out of the seven—and then, of course, 2023 was stratospherically the highest, at 4½ times the long-run average.

Anyway, leaving that aside, not only do we want homes but we also want homes built as part of well-designed, connected, supported communities with good infrastructure, because it's not just about building homes; it's about building in the context of a wider community and a place that's good to live. But they've also got to be not just warm and dry, but they've also got to be affordable, because we can have fantastic homes, but if nobody can afford them, that is not going to get us anywhere, and that's true of whatever part of the housing spectrum you're on—whether it's private housing, whether it's social housing, whatever. They've got to be affordable to somebody, because there is no magic money tree and, as a country, we need to make sure we get good value for money out of all of these things.

I was interested that Cam Luxton—and it's always good to talk after Cam on building issues. He made the point about being a property-owning liberal democracy and that being really, really important, and I'd 100 percent agree with that. But it was interesting to see the reaction from the Green Party, which almost questioned that, and I'd just like to say that the value of being property owning, as opposed to property renting, is really, really important. If we think about our ageing population, we're now expecting twice as many people entering retirement to be living, potentially, on superannuation alone, with the hope that somehow people in that situation are going to be able to afford either rent or a mortgage, and that's a ticking time bomb and it's ticking quite fast. So having a property-owning liberal democracy is really, really important.

We also need to think about creating, as I said, community. I think it's far, far better when we have people who are an anchor in a community, and the longer you stay in a community, generally the better. Now, whether that's a long-term rental and secure rental or whether that is owning a property, I think that gives you a lot more commitment to a community.

But back to affordability. The fundamental problem here is that our housing construction is very, very expensive—we heard from the Minister, at least in introducing this bill a few months ago, roughly 50 percent more than across the Ditch—and that is really, really significant. Our materials are expensive. That's what this bill is all about. Our labour productivity, he has also said, has not improved since 1985. Now, if you look at the things that people build with these days compared to what they built with in 1985, some of them have changed. They must have improved productivity, and yet somehow our regulatory processes have squeezed that productivity gain out, so the net that is our building industry has not improved in its productivity since 1985. Cam Luxton, again, talked about liberating the building industry from red tape, and I would echo that and support that.

Regulations: our regulatory regime often does not help. The way those regulations are administered often doesn't help, and we've all heard stories about a building site where building activity has to shut down to wait for the building inspector to turn up at some point in time. That time is really money not only to the builder but also to the clients at the end of the day.

Our land is expensive. Our infrastructure to support housing development is also often expensive. As I said, there is no magic money tree, and if you start making a magic money tree and borrowing from someplace or subsidising from someplace, that is also a cost to someone, whether it's a rate payer, a taxpayer, or whoever else it might be.

This Government is trying actively to reduce costs, but there is no silver bullet. This is one of many things that the Government is doing. This is about reducing the cost of materials and increasing competition in the product market. There's also work being done in speeding up consents, especially that disruptive asking for more information in prefabrication, although I note that Fletcher has had a bit of a problem recently and are not continuing with some prefabrication work that they were doing previously. So they're changing what a factory does. There is modular construction; the granny flats initiative, which, of course, came from New Zealand First in the first place; Resource Management Act changes; and also getting realistic development charges so that we don't overburden but we also don't cross-subsidise.

Why is getting house building costs down important? Because there have been some people who've just said, "Look, what we want to do is we want to drive the market down, because if we can reduce the cost of existing houses, that's a good thing, isn't it?" Well, actually, if you look at the numbers, what you can see is that the market peaked at the end of 2021 or the beginning of 2022, and at that point in time, we also had about 51,000 new houses being consented. The market subsequently has declined, at the bottom, at about 16 percent and, now, at about 14 percent. But what's happened also is there's been a slide in the number of building consents applied for, going down from about 51,000 to about 31,000. I think that those two probably mirror each other in some way or are related in some ways Trying to, essentially, hope that house prices drop when the cost of building the houses is actually increasing is a recipe for not building more housing. If we want more houses, that is not going to be the way that solves it. As the Minister said, the cost of construction is up about 40 percent since 2019, so those numbers don't work.

Fundamentally, we have to get the cost of building down. This is about the building product part of that. It's about more competition from greater diversity of products, which is expected to reduce price, give greater diversity, and give greater choice. The Commerce Commission, as we've already heard, noted the lack of competition in some parts of the building product market, and they believe that greater competition will benefit consumers. Of course, I think the Commerce Commission is doing some great work across a whole range of different areas at the moment, and so I think we should hear that message.

This bill establishes a new, easier, quicker compliance pathway for the approval of new products and product groups from internationally certified products and product lines, so it's not just picking things off the shelf from whichever country it might be; it's saying, "Hey, this is a country whose certification process we trust.", and it's adopting those. It's a quicker pathway to adopting those certification processes. The bill anticipates adopting products and product lines only from countries where we have confidence in these certification processes.

We've already heard that 90 percent of something or other—90 percent of building, whether it's products, product lines, the different products that we've got on the lines. I don't think it's the value of those products, but if it's 90 percent of something, we're already importing a very large number of building products and using them in our construction. So this just makes it easier for some more to come into our market.

But the really important thing is that it is really essential that the quality of those products is as good as we already have. The Transport and Infrastructure Committee worked really, really well on this, as we normally do—our very collegial select committee—talking about the safeguards and the processes that are there, and I traversed this, comprehensively, in my second reading speech, because we all remember the leaky building crisis. We do not want to go there again. That was painful for everybody and very expensive for everybody. But what we heard through the select committee process that processes are now much, much more robust. Of course, there are changes to legislation as well, and we also have the safeguard of a highly skilled and qualified building advisory panel for the Ministry of Business, Innovation and Employment and for the Minister.

What's good is that this bill does that, but also it includes protections for local government who can use these products which come through this scheme in good faith. If the product fails, it's not the local government's fault—it never was with leaky buildings, and it shouldn't be now—and now, at least, they're indemnified against that. They're not indemnified against failure to make sure that it's used properly, but they're indemnified against the product failing.

What it doesn't do—and I raised this in my second reading speech—is provide safeguards to the end user, or end consumer, should the product fail. This is a place which I hope the Government would stand behind and say, "Look, something's failed. We certified that. We approved that. We let that come in. We will help you with that and with getting things put right."

Just to finish off, this is a good bill. I think there's unanimity around the House. It's shortly to become law. It is part of a multifaceted response by this Government to New Zealand's housing challenge, and I commend this bill to the House.

MARIAMENO KAPA-KINGI (Te Pāti Māori—Te Tai Tokerau): Tēnā koe, Madam Speaker. I rise to take a short call on this, and I made some comments through the committee of the whole House just around my own experience in that and what it means to build affordable homes and what it means to use your own product, to go into Aupōuri Forest and use your own trucking teams to bring your houses from Awanui to Te Kao—experiencing very similar outcomes, too, in places like Tākou and Ahipara.

I raise these names because they are small Māori communities. They're tribal communities, and they have their own solutions. So if this product—this safe and better and quality product—comes true, we're going to pick it up and go with it and make good of it. We support this—we support this.

Maybe I just want to make this final point, though, which is to say that none of what we're doing here interferes with the solutions that go on in terms of, say, the small communities that I've just referred to, because we got to build 16 homes without any interference—or not too much interference, let's say—from anyone else. When the chair, Andy Foster, referred to how the Transport and Infrastructure Committee is a good committee—and I'm not on it any longer, but we wouldn't want to mistake collegiality for agreeing in wholeheartedness on what comes through certain select committees. So I just wanted to say tautoko tēnei take [matter]. Tēnā koe e te Speaker.

SCOTT WILLIS (Green): Thank you, Madam Speaker. We are also in support of this bill, but we do have some concerns and questions. If you indulge me, I want to tell a bit of a story because I have been involved in the construction of alternative buildings in the past.

In 2019, running a non-governmental organisation, I did work with a whole lot of volunteers and a whole lot of sponsors to build New Zealands first climatesafe house. The purpose of this house was to address a very real issue. Somebody who was living in a caravan in a garage, whod been flooded multiple times, whose own home had lost insurance and needed somewhere to live. This was a situation of real hardship. It was thanks to the Otago Polytechnic actually, who wanted a good project to work on, and some creative people that we hatched this idea of building a modular, transportable eco-home that was self-sufficient, that could be moved when this particular part of the village becomes uninhabitable because it is flooded so many times. The idea of that was to use new building techniques, low carbon construction, low waste.

There were fantastic donations from Formance who produce structural insulated panels (SIPs) based in Christchurch, uPVC windows. Otago Polytechnic, the Dunedin City Council, Eclectic Home Design, Naylor Love, DS Building, Fulton Hogan, Dave Littleton Engineer, BRANZ, Fisher & Paykel, Dunedin Roofing Systems, Logic Group, etc. Lots and lots of people who donated to make this happen. The thing that we were doing, however, was using new materials that the Dunedin City Council, the building consent team didnt know how to deal with, and the Polytech team of aspiring builders didnt know how to build with this new material. This is a real concern because we want to make sure that the new systems are understood.

SIPs are a structural system. They are useful for the primary structure of the building and therefore everyone in it. Any short cuts in certification or any poor understanding in how it can be constructed can lead to problems. Alongside access to new materials, we also need training schemes. Ive been really impressed with Formance who have worked to help train people up on how to use SIPs, but are we going to have all of those training schemes provided for all the new materials that come in? Are we going to have systems to help our building consent officers to understand how things work? This bill makes it great sense when were thinking about claddings and linings, but we also need to be very much more careful if were thinking about structural components that need a different level of certification and compliance.

I really want to make the point that structure—if we want to think about the Maslow hierarchy of human needs, the hierarchy has a structure. If we get it wrong, then there are problems. There are costs, there may be lives lost, etc. So I want to make sure that when were working on this were not doing it with shortcuts and were also thinking not just about the cheapest houses we can build, but what is the lifetime cost? Because we dont want cheap and nasty. We want affordable but cheap to run, affordable to run lifetime cost.

So Im really, really heartened in the regulatory impact statement, the Commerce Commission has looked at strengthening code mark, for example, convening a critical minerals task force, the build ready scheme, building product information requirements, product substitution guidance, etc. These are really good recommendations. We want to make sure that we have we have products that are understood, and we have the skills in our community to make sure that they are used and employed appropriately and quickly.

DAN BIDOIS (National—Northcote): Today is a good day; it is New Zealand's liberation day. And, no, I'm not talking about liberation in terms of tariffs. I'm talking about liberation from not being able to use overseas products for the building sector. It's a good day for tradies, for developers, for manufacturers, for those wanting cheaper, warmer, drier homes and buildings, and for our economy.

There's just been a report on the news that after this bill is passed, it's forecast that 12,000 new building products will enter New Zealand's market. That is going to make it cheaper and easier to build in New Zealand.

As has been mentioned in this House by the Minister, it's not just about compromising standards; the products—to be allowed in—will need to reach New Zealand's standard or better. But it will mean a more competitive sector, a more productive sector, and that is what we want in this country. Because the Commerce Commission has made it very clear: we have an unproductive building and construction sector, much like many different other sectors in New Zealand, whether it's airlines, whether it's energy, whether it's the grocery sector, the banking sector, the insurance sector. We are in desperate need of more competition across the board.

We are going for growth in this Government: going for growth in houses, going for growth in productivity, jobs, economic growth, and I wish to thank the Minister, Chris Penk, for bringing this bill to the House, my fellow colleagues on the Transport and Infrastructure Committee for shepherding this bill to the stage, and officials. As has been mentioned, this is just one tool in the toolbox and it is a good tool, at that.

So I wish to end my speech and commend this bill to the House.

Hon KIERAN McANULTY (Labour): Thank you very much, Madam Speaker. Today's the sort of day that I wish more New Zealanders saw. In Parliament, we've just seen a bill that started under the previous Labour Government and was finished off by this one, and now we've got a bill that builds on the work that was done by the previous Government. The way things are going in politics around the world, it'd be nice for people to see this a bit more. But it actually happens more in Parliament than people realise.

This bill makes sense. It is fair to say that the construction sector in New Zealand has had artificial constraints upon it. It has not been a competitive market, and the Commerce Commission report identified where those constraints were. This bill won't solve all of that, but it will help. And it's very timely, because today is the day that the annual consent figures have been announced. They showed that the number of building consents that were issued over the last 12 months were the lowest since 2012. That actually should be of concern to all of this House, that the construction sector in this country has had a massive hit. That is in part because we have seen a pause on Kāinga Ora builds, and a slowdown in community housing builds, and a slowdown in residential builds. We've seen more than 13,000 people that work in the construction sector lose their jobs, many of which have gone to Australia. So the previous speaker was right to say that this bill was not the silver bullet, but it will help. It will help because so often the cost of construction is linked to the cost of materials, and the cost of materials is linked to the variety of materials available. And so often, we've seen constraints in the market, such as consenting authorities dictating that a particular type of building material be used, even when there were alternatives available. That sort of behaviour does not help in terms of trying to keep the cost of building as low as possible.

Whilst we support this, it's important to point out that we talked to the Minister during the committee of the whole House stage and sought his assurance that the regulatory powers available to him would be used if required to preserve local manufacturing. Because at the end of the day, this bill allows products that are manufactured overseas and certified overseas to be used with equal application in this country. Part of the reason that local manufacturing has struggled is because it hasn't been a competitive market. Yes, this will provide more options, but more overseas options. It's important that the Government takes that seriously, because there are local manufacturers who produce building products who haven't had a fair run, and we need to be assured that they will get a fair run under this. That it won't simply be overseas manufacturers getting access to the market and that have such dominance of the market that they will drown out or strangle local manufacturing. That would be counterproductive.

It's important that consumers get a broader range, if possible, when it comes to building supplies, but it's also equally important that those supplies aren't all manufactured overseas. Now that is on the Minister, whoever that may be in this Government and future Governments, and we want to put on the record that that is a concern of ours. We obviously support the bill, but it's important that that be acknowledged and monitored. Because if this bill, in providing consumers more options, is at the detriment to local manufacturing, that is counterproductive. But nevertheless, we've said that, we're going to be monitoring that ourselves, and the Minister assures us that he believes that the bill has enough provisions in order to preserve that. We're not fully convinced of that. Ultimately, it comes down to what regulations they bring in and what powers are available to the Commerce Commission. Nevertheless, this is important. The New Zealand construction sector is struggling. We all know the reasons why, but this is a positive move and we support it.

STUART SMITH (National—Kaikōura): Oh thank you very much, Madam Speaker. It's a great pleasure to speak on this bill, actually. New Zealand has a black belt in red tape, and a "could do much better" in actual productivity in a number of sectors, and particularly in this sector. It's not down to the people involved in it; it is all the rules around it that make it quite difficult and slow.

My colleague Dan Bidois said earlier there was 12,000 new products likely to come and I think that's a good thing. But as the previous speaker, the Hon Kieran McAnulty, mentioned, New Zealand product producers—or building product producers—will, I'm sure, compete. We don't know how good they will be at competing because they really haven't had much competitive tension in some parts of the market for products. So this is going to be a great thing.

We often think that New Zealand's unique because we have strong winds, so we have to build structurally to account for the wind and seismic risks that we have in New Zealand. But that's not unique—that happens everywhere around the world. I think the fact that, under this bill—and I remember hearing the evidence in the Transport and Infrastructure Committee—that doesn't mean we're lowering our standards, not at all. We're just opening the market up and allowing other people to bring it in and not be held up by all the processes. And so I had a look at that, and that's great.

The Minister for Building and Construction mentioned consenting, so actually I'm going to refer to that because I have here the median time for a building consent to be issued. I won't call out all the councils, but one of mine's not doing very well. Marlborough District Council: 12 days, it takes to process a building consent. Whereas at the other end of the scale, also on my patch, at Kaikōura, is half that: it's six days. So how can a very small council actually do that—process those consents—in half the time? I don't know how that is, but certainly there's some good lessons to be learnt around the place.

Every day costs money and it's not just this part of it; all of those little inefficiencies in the process add cost and frustration, and it's time these things were brought to an end. That's why this bill is so important and I commend it to the House.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Madam Speaker, for this opportunity to take a short call on the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill—that is quite a mouthful, but we have heard some good speeches on this bill this evening, and it's good to see sensible legislation being considered in thoughtful ways by members from around the House.

I want to just touch on a couple of things, and we heard from Labour's building spokesperson, Arena Williams, that when she was involved in going through the select committee process and the committee of the whole House process, she was looking at this bill with three different questions in mind. The first was: is this going to reduce the price for consumers rather than simply leading to a profit for people importing the new materials? We've just heard from the Hon Kieran McAnulty that it's very important there that that is monitored. That's something to keep doing after this bill passes.

Another issue that Arena Williams was focused on is that health and safety and quality issue that the previous speaker, Stuart Smith, just referred to. The advice that was given during this process was that it will not be compromised, and that's very important.

The third issue is: are local manufacturers of building products getting a fair go? We know, and we will have heard in many of the debates, about new products such as saveBOARD, which I'm interested in because it's made from recycled materials, and, of course, here on precinct we have a good example of it out the back of the building, protecting us from the work that is going on in that building site just next door to us. So it's good that we have these manufactured products in New Zealand, because whilst the previous speaker was saying New Zealand's not unique, we are uniquely far away from everywhere else, so it is very important that we have building materials here in New Zealand, and we might be able to make use of some products that other countries can't.

But what is so important about this point is the settings that will be made in secondary legislation, in the regulations. We need to make sure that these regulations don't favour the international products over our locally manufactured projects. I think the Hon Kieran McAnulty put this very nicely when he said that they need to be getting a fair run. That's important, and I ask the Minister for Building and Construction to make sure that he does do this through the regulations and the regulatory settings, and, of course, Government Ministers who will be involved in the development of those regulations. Labour will be watching that closely.

But, on that note, I do want to commend this bill to the House and congratulate the Minister for bringing it here.

MIKE BUTTERICK (National—Wairarapa): Thank you, Madam Speaker. This very welcome piece of legislation is being introduced to the House by our very own "Mr Fix-it", the Hon Chris Penk. While Minister Penk may not be Bob the Builder, he is however rebuilding our legislative framework, one plank and one nail at a time. This rebuild will actually have a significant and positive impact on the building and construction sector in this country. Because we know, right now, we're facing a market where the competition of the building products isn't working as well as it could and should be, and we have barriers that are preventing high quality overseas products from entering our market.

So, this bill's about removing those barriers, increasing competition, and giving builders and homeowners more choice, ultimately driving down costs. This bill will recognise overseas standards and certifications, streamline the use of international standards, and accept overseas certifications for building products. Simply, this bill provides for more competition which means more choices, lower prices for building products. Increased resilience to supply chain disruptions so we can get products from more countries, and a quicker building process with fewer barriers and faster consenting.

To sum it up, this bill's about improving the competition, lowering costs, and making the building industry more resilient. So this is just one part of our ongoing work to reform the building and construction sector to meet the needs of all New Zealanders. Can we fix it? Yes we can. Will we fix it? Yes we will. I commend this bill to the House.

Hon DAVID PARKER (Labour): Thank you, Madam Speaker. I listened to Mr Foster's contribution and agreed with much of it. I think New Zealand's come a long way in reaching a cross-party consensus as to what are the main ingredients of a more affordable long-term housing market for both people who own their own house or people who rent. I want to respond to some of the comments that Andy Foster made.

When we came into Government, land supply was terribly, terribly constrained in New Zealand, and there was an agreement within Treasury—and I think within the outgoing National Government—that the artificial scarcity of building opportunities was flowing through to the price of all houses, new and old, because markets clear at the marginal cost of the new increment to supply, and if the new increment to supply is held falsely high in its price, that flows through to all of the prices of the second-hand goods as well. Therefore, one of the main problems that we had in New Zealand was tight land supply, which was not just driving up the cost of a new house but also pulling up the price of all second-hand homes in New Zealand, or previously owned homes in New Zealand.

So what do we do about that? Well, we massively increased building opportunities in New Zealand. In truth, some of the work had been done through the Auckland Plan process that Rodney Hide led the legislative framework for, and so there were more medium-density houses provided for in the Auckland market. We then took office, and we did three main things: we introduced a national policy statement on urban development, which vastly increased supply and made illegal some things that were driving up the cost of supply, including excessive rules relating to car park requirements and the like. We then, at the same time, had a piece of fast-track legislation that was enabling the consenting of lots of subdivisional opportunities to come forward, in a way that would not have otherwise come forward. We next, working, actually, in concert with the National Party under Judith Collins, legislated for what was called the medium-density residential zone directly through an amendment to the Resource Management Act (RMA). That also forced councils in high-growth areas to change their plans to bring forward more house building opportunities.

Then, through the RMA reforms, we introduced spatial planning to give a signal to the private sector as to where the investment was likely to go next and also to make some more rational decisions for the expensive trunk infrastructure like new roads and railways and schools and hospitals—where those things are likely to be placed—in order to give some direction as to where investors should invest next. We started to reform infrastructure funding and financing, because that's a big part of the costs as well, and it's pleasing to see that that work's continued also under the current Government, with Chris Bishop recently announcing how you can have a levy for generalised infrastructure costs that are going to be imposed by a new area of development, which, if not paid for by that development, is, effectively, putting the cost to the council and other ratepayers. And that's wrong—you need to get those costs properly internalised via subdivision where possible.

Now, I know the RMA reforms that we passed have since been repealed, but the Government is continuing with that part, the spatial planning reforms, because they are a necessary part of the picture. Then, in respect of house-building costs, you obviously need a workforce. We doubled the number of people who were being trained for apprentices and other trades courses, mainly in the construction sector, and that helped. We also built a lot more State houses, because one of the things that you need in any Western country is a mixture of private-sector housing but also some social housing, and that can be split in ownership between the Government and housing providers that are non-governmental. It's a little bit galling for us on this side to hear the Prime Minister today claiming that all these people came off the motels and placed in housing, because we on this side know that those houses were actually built by the Labour-led Government, who introduced more new public housing than any Government has done since the 1970s.

Hon Paul Goldsmith: It's a tough business.

Hon DAVID PARKER: Of course, that record is to be contrasted with the last two prior National Governments, which decreased public housing stock, both in total numbers but they also particularly reduced the numbers that were owned by the Crown—and I know, Madam Speaker, I'm doing exactly as Andy Foster did, recounting all of the complex things that need to be done to bring a housing market under control.

Then, in respect of the house-building costs, you also need to address the cost of components for housing, and that's what this bill addresses by making it more easy to bring in products from overseas, creating a system for the specification to be registered and the mode of use of those new products to be brought forward.

If there's one disappointment that I have here, it relates to how you actually make building consent authorities within council allow the incorporation of these products in a way that is not too time-consuming or expensive. I proposed an amendment at the committee stage that I was disappointed the Government did not support, because we know—and I think all of us know in this House—that one of the problems that we have in council planning departments, and this is caused partly through the incentives that they face because of the legal risk they face, but it's only partly that—they are requiring more and more and more paper, or the electronic form of paper, to be filed in respect of each consent application. Even where a product has been approved for use, the practice has become prevalent in the Auckland City, and I'm sure in some other consent departments around the country, where they require the method of use as well as the underlying specification for those products to be filed in every building consent application, rather than just referring to the product that has been approved. Now, that is wrong, because there are already obligations on the architects and the licenced building practitioners to use those products properly if specified, and they should not have to put all that additional detail in.

Now, the answer that the Minister in the chair gave was that that's not required by law. Well, it's not required by law, but you can't beat City Hall, because when the City Hall asks you for those documents and you're the architect or the builder, what are you to do? The only way you can beat City Hall in that situation is through judicial review, which would cost tens of thousands of dollars and cause delay. Therefore, the architect or the builder is, effectively, forced to do what the council unreasonably asks—the council building consent department. They either go to the back of the queue or have a fight that they're not going to win anyway, and they end up paying the extra $300 fee for the extra information that the council's sought and charged them another hour of their own time for. They give up, they give in on every occasion, because if they don't, they face those additional costs and they go to the back of the queue, and it causes further delay and costs to themselves and to their clients. So it puts up the costs that are charged by the council to the applicant, puts up the applicant's own costs through delay, and also the costs that are being charged to the applicant by the applicant's advisers, be they builders or architects or engineers.

I had suggested an amendment saying that where those documents had been filed, the council couldn't ask for them to be filed again, because I think we actually have to do something pretty directive here because otherwise councils will do what they are currently doing under the current law, and they'll continue to do it. So I was a bit disappointed that that very practical amendment was not favoured by the Government members, because we actually had an opportunity not just to introduce these products in a way that is efficient—that is, provided for in the book here, in a authorisation of those to be products to be used, as we did with GIB substitutes—we actually had the opportunity to go further and strip out this ridiculous repetition of what's being required by councils to be filed at great cost.

I repeat again that just coincidentally in the last week, I had a very experienced architect with 50 years' experience—Malcolm Walker, who I know well—come to me and say that the architects in Auckland and the builders are just tearing their hair out at this ridiculous waste of cost with the council intruding into what really ought not to be their purview. None the less, we support this bill as being a helpful addition.

Dr VANESSA WEENINK (National—Banks Peninsula): Thank you, Madam Speaker. It's an honour to be the final speaker in this third reading of the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill.

So as many have traversed through this evening, this is an excellent piece of legislation that will allow greater competition through the introduction to the New Zealand market of a new variety of building products and other systems. This is going to be supported by the regulatory schemes that go alongside it. This means that the standards of the products coming in will be as high, if not higher than others. One of my colleagues across the House mentioned a building manufacturing company from my electorate called Formance, who make structural insulated panels which are excellent—apparently harder to get consent to be used in Dunedin than they would be to be used in Christchurch. Yet another of the crazy problems that we have in New Zealand where there's huge variation between regions of what is acceptable.

So this is another area that we'll be attacking with different legislation, but under this piece of legislation, we will be massively increasing the options for the building companies, for the architects and designers. This will make a tangible difference to the costs of building in this country, which, as we've discussed, has been far too high for far too long. It's slowing down our economic growth. This is something that is a part of our plan for going for growth and we will fix it. We will get it done. I commend the bill to the House.

Motion agreed to.

Bill read a third time.

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